OTC Markets, OTCQX Benefits, and NASDAQ - There are many benefits to trading on an exchange such as NASDAQ. The biggest benefits to an exchange are the ability to attract analyst coverage and institutional investors, and the corresponding increase in liquidity that comes with both. Stocks that trade on NASDAQ tend to have a lower bid/offer spread than over the counter securities —again, encouraging trading volume and liquidity.
Importantly, exchange traded securities are exempt from the penny stock definition, allowing for more market maker and broker-dealer participation. A broker-dealer cannot recommend a penny stock transaction to its retail clients, and therefore, no analysts, financial advisors, or institutional investors make recommendations for purchases of penny stocks.
As an aside, this is one of the reasons that OTC Markets created the OTCQX Market tier, which does not list penny stocks. It is also the reason that the small- and micro-cap industry is pushing for a supported venture exchange. A designated venture market would be one for small-cap companies, which would allow for higher brokerage and trading commissions, be exempt from the prohibitive penny stock rules, and which securities would be considered covered securities under federal securities laws and thus exempt from separate blue sky compliance.
I think that the OTC Markets has the foundation to set the OTCQX as a recognized venture exchange platform and would love to see it gain regulatory support in that regard, including blue sky pre-emption.
In today’s world it is increasingly difficult to deposit stock and/or trade in non-exchange traded securities. Despite the congressional efforts and SEC rulemaking in support of small and micro cap capital formation (for example, the JOBS Act, including the emerging growth company regulations and IPO on-ramp, new Regulation A+ and Title III Crowdfunding and the new FAST Act), through enforcement and investigative proceedings, both the SEC and FINRA continue to apply pressure on broker-dealers, clearing firms and transfer agents to reduce the secondary trading and free flow of low priced securities. Although these issues need to be addressed on a broader basis, securities listed on NASDAQ and other national exchanges do not face many of these issues.
As mentioned, exchange traded securities are considered “covered securities” for purposes of blue sky compliance. That is, transactions with exchange traded securities are exempted from separate state blue sky law registration and exemption requirements.
Laura Anthony, Esq.
Legal & Compliance LLC.
330 Clematis Street, Ste. 217
West Palm Beach, FL 33401
Toll Free: (800) 341-2684 FREE
Local: (561) 514-0936
[email protected] #LawCast
In-Ground Pool Buyers Guide.
How to choose the right pump.
Choose from 3 filter types.
Learn about drain safety.
Heaters can extend your pool season.
Set the mood with pool lighting.
A safety cover is essential for your pool.
Learn about fence requirements.
Choose from 3 types of pool cleaners.
Keep your pool sparkling.
Personalize your pool with an in-ground spa.
Landscaping makes your backyard an oasis.
Deck and Patio.
A deck or patio can complete your pool.
Relax by your pool with patio furniture.
The most important aspect of owning a pool.
Choosing Your Materials.
Learn more about the Vinyl Pools and Vinyl Liners offered by Rising Sun Pools.
Learn more about the Fiberglass pool options offered by Rising Sun Pools.
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Rising Sun Pools recalculates the pump size for every pool we build.